Greetings, and welcome to the UiPath Second Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn it over to our host, Kelsey Turcotte, Senior Vice President, Investor Relations. Thank you. You may begin.

Great. Good afternoon and thank you for joining us today to review UiPath’s second quarter fiscal 2024 financial results, which we announced in our earnings press release issued after the close of the market today. On the call with me are Daniel Dines, UiPath’s Co-Founder and Co-Chief Executive Officer; Rob Enslin, Co-Chief Executive Officer; and Ashim Gupta, Chief Financial Officer. Rob will start the discussion and then turn the call over to Daniel. After that, Ashim will review our results and provide guidance. Then we will open the call for questions. Our earnings press release and financial supplemental materials are posted on the UiPath Investor Relations website: ir.uipath.com. These materials include GAAP to non- GAAP reconciliations. We will be discussing non-GAAP metrics on today’s call. This afternoon’s call includes forward-looking statements about our ability to drive growth and operational efficiency [Technical Difficulty] full year fiscal 2024. Actual results may differ materially from those expressed in the forward-looking statements due to many factors and therefore, investors should not place undue reliance on these statements. For a discussion of the material risks and uncertainties [Technical Difficulty] for the year ended January 31, 2023, and our other reports filed [Technical Difficulty] July 31, 2023 to be filed with the SEC. Forward looking statements made on this call reflect our views as of today. We undertake no obligation to update them. Finally, we invite you to join our user conference, Forward VI, next month in Las Vegas from the evening of Monday, October 9th through Wednesday the 11th. Please reach out to the investor relations team for details. I would like to highlight that this webcast is being accompanied by slides which includes an embedded AI demonstration video. We will post the slides, and a copy of our prepared comments to our investor relations website immediately following the conclusion of this call. And with that, I will hand the call over to Rob.

Thank you, Kelsey, and good afternoon, everyone. Thank you for joining us. Second quarter was incredibly busy. Highlights include the delivery of exciting new AI platform capabilities and several high-energy in-person customer events around the world, all of them to standing room only. Not surprisingly, AI is at the top of everyone’s agenda. Digital transformation, where automation plays a strategic role, has never been more important or, with the latest evolutions in AI, more powerful. Customers are excited about the value we deliver and recognize that our platform, which has been infused with AI since inception, provides an integrated set of capabilities that combines the best of our Specialized AI and governance with the creative power of GenAI, making the potential of automation almost limitless. And we aren’t just talking about AI, we deliver on the promise of AI and automation today across our platform. In particular, communications mining and document understanding are generating a lot of excitement which Graham Sheldon, our Chief Product Officer, will demo in a few minutes. Turning to the numbers, we ended the quarter with ARR of $1.308 billion, an increase of 25% year-over-year, driven by second quarter net new ARR of $59 million. We have approximately 10,890 customers, including new logos like Australian Postal Corporation, Leroy Seafood, Holmes Murphy & Associates, Daewoong Pharmaceutical, and Arrow Food Distribution. Customers with $1 million or more in ARR increased more than 30% year-over-year to 254, while customers with $100,000 or more in ARR increased to 1,930. Second quarter revenue was $287 million, an increase of 19% year-over-year. Non-GAAP operating margin increased from negative 5% in the second quarter of last year to positive 10% in the second quarter of this year. As we progress towards our 20% plus long-term operating margin target and, we delivered $47 million…

Thanks, Rob. Good afternoon everyone, before I begin, I want to thank our team members for their relentless commitment to building UiPath, serving our customers, and delivering our market leading AI-powered Automation Platform. I believe we are now at an inflection point with AI and I’m excited to have more time to focus on this next important evolution for the company. This is a time of unprecedented technology advances. Having said that, AI has been an integral part of our platform since inception, starting with our original core capability, Computer Vision, which allows software robots to see and understand screens. Today our entire platform is infused with AI and we are at the cutting edge of the quickly evolving intersection of AI and automation. To be effective, Generative AI needs context, which our software robots can deliver by gathering information from across the enterprise - in data, documents, CRM, ERP, and beyond. It also needs our platform to take action and operationalize the promise of AI today with an integrated set of capabilities that combines our Specialized AI with Generative AI. And, finally, it needs the governance our platform provides to help customers overcome a significant barrier to adoption. Looking ahead, we expect this next evolution of GenAI to be a tailwind to the business, helping customers create better, more resilient automations more quickly and opening up novel use cases that facilitate the automation of even more processes. First, we are enhancing developer productivity by reducing barriers to development with co-pilot-like experiences and project Wingman which we showed you during last quarter’s earnings call. At the Ai4 Conference in mid-August, we officially launched Wingman into private preview and we are already seeing strong demand from customers. Wingman brings together our AI Computer Vision’s deep understanding of computer screens with GenAI…

Thank you, Daniel. And good afternoon everyone. Unless otherwise indicated I will be discussing results on a non-GAAP basis and all growth rates are year over year. Turning to the second quarter, ARR totaled $1.308 billion, an increase of 25%, driven by net new ARR of $59 million. Excluding the FX headwind, net new ARR totaled $61 million. Included in this total is more than $500 million in Cloud ARR, both hybrid and SaaS, an increase of more than 125%, as customers continue to adopt our cloud offerings. For example, Scotiabank, who chose UiPath to further scale their global automation program as they move to the Cloud and plan to utilize our AI capabilities, document understanding, and unattended automation. Our dollar-based net retention rate for the quarter was 121%. Normalizing for FX, our dollar-based net retention rate was 125%. Dollar-based gross retention of 97% continues to be best-in-class. Revenue grew to $287 million, an increase of 19% year-over-year. Normalizing for FX impact, which was an approximately $3 million tailwind, revenue grew 17%. Remaining performance obligations increased to $905 million, up 28% year-over-year. Normalizing for FX impact, which was an approximately $4 million tailwind, RPO grew 27%. Current RPO increased to $560 million. Turning to expenses. We delivered a second quarter total gross margin of 86%. Software gross margin was 91%. Second quarter operating expenses were $217 million. The restructurings we announced in fiscal 2023, combined with our go-to-market segmentation, have created an organization that's increasingly efficient and scalable and one which gives us ample room to continue to expand margins without sacrificing investments to grow the business. GAAP operating loss of $78 million included $102 million of stock-based compensation expense. Non-GAAP operating income was $30 million, resulting in a second quarter operating margin of 10%. Second quarter non-GAAP adjusted free…

Thank you. And ladies and gentlemen, we'll now conduct our question-and-answer session. [Operator Instructions]. Our first question comes from Raimo Lenschow with Barclays. Please state your question.

Perfect. Thank you. Congrats from me. One question on the -- in this new world where AI is getting more and more important, what do you see in terms of your customer conversations with budget still kind of limited from the budgeting cycle last year? Like how does it play out for you? And how are you competing for budget dollars in this sort of environment where you know you need to spend more on AI, but the money needs to come from somewhere. And how does it fit to like overall spending? Thank you.

Yeah, Raimo, I would say it's positive for us the discussion around AI. I think it helps infuse the platform. Our message around specialized AI and Generative AI together has really come through. Customers are generally confused by all the announcements that happened in the market, and they like our approach of showcasing how we've actually bolted into the product with Wingman and Jarvis and other solutions, which actually and document understanding, which we actually showed, which actually helps the platform be more valuable to them and helps us drive the platform to more important consequences.

Yeah, I would like to add that more customers are realizing that automation is a great mean to get more value from Generative AI. Actually, even today, I was talking to one of the largest airline in the world, one of our biggest customers. And they highlight how they plan to combine GenAI with automation in their customer service. So I would say that it's a great tailwind for automation adoption across most of our customers.

Okay. Perfect. Thank you. And a quick follow-up for Ashim. Like a great increase on the free cash flow outlook. Were there any special factors in there that we should be aware of or just the better profitability is starting to play through? Thank you, and congrats again.

Thanks, Raimo. No, just we feel really good about the changes that we made last year. We are continuing to see benefits of that come through. So that's organic. There's no special items to mention. And we feel like that is a sustainable path forward.

Thank you.

Thank you. And our next question comes from Mark Murphy with JPMorgan. Please go ahead with your question.

Thank you so much and I’ll have my congrats on top of Raimo’s. Ashim, are you able to provide the Q3 ARR growth guidance if we converted it into constant currency terms? And/or what is implied for the fiscal year now in constant currency terms. I'm not sure if any of that has moved around.

Yeah, nothing has really moved around. We talked about it in the script of the headwinds, Raimo -- sorry, Mark. And so like I think that what we provided is there, normalized for foreign exchange, it's 26% growth in terms of the year-over-year comparison. And I'd say very similar outlook here for third and fourth quarter in terms of FX. It's not much of an impact as we go forward.

Okay. Got it. And then, Rob, I'm curious just how commonly you see UiPath being pulled into some of the boardroom discussions out there that are maybe being led by the Accentures and Deloittes and Capgemini's of the world when they're sitting down with a large company and trying to formulate a Generative AI roadmap for a customer, and they made sense that some RPA would be involved as part of that tapestry. Do you see much volume along those lines popping up into the deal pipeline because I think you had some pretty upbeat commentary on that, how that pipeline is developing?

Yeah. Mark, what I'd say we're having much more significant conversations with the systems integrators and with customers together with the systems integrators where we actually are working on joint opportunities with them. I would not classify it only as RPA. It is about the platform, it's about document understanding, communication, mining test, mining the moat that makes a difference and infusing our GenAI capabilities, which are actually visual for customers to see and how that benefits them. So that's happening much more. I mean, I spoke a lot about our NorthStar in the script, and our NorthStar is having -- is placing us in the boardroom. I mean, the value proposition that we are able to showcase with our customers even at a conservative level, is very, very strong. And I mentioned a very large insurance company, where we went out to a pretty detailed process level on explaining how automation and the full platform can benefit them. That customer is going to replace the document -- the existing document understanding with their communication and test mining and process mining and go all in on the platform. So we're very positive about our approach the SIs and being in the boardroom with customers, and we feel like it's fulfilling the -- what we said two quarters ago that, that's what we needed to do.

Excellent. Thank you so much, Rob.

Thank you, Mark.

Our next question comes from Bryan Bergin with Cowen. Please state your question.

Hey, guys. Good afternoon. First one, on just the go-to-market progress. So is there any additional metrics you can share that would really demonstrate that the change in the go-to-market in really selling down through the C-suite is gaining that traction? I think I heard 30% growth in that $1 million cohort year-over-year, which is certainly encouraging. But just anything else there you can give KPI-wise sales force productivity, anything like?

I think when you look at it, that is the primary metric that we look at, Bryan, because the $1 million-plus customers really shows the value of the platform in terms of what's moving and that is up 34%. We feel customers greater than $1 million that we feel really content with. The intangible piece that you also can look at is just overall, like our RPO balance is growing very well, which shows continued commitment on deals from our top customers. And then Rob has commented, but we really like the activity and the way that the sales force and the intimacy of customer relationships is happening. We talked about it in the first quarter among some of the changes. And feel like those discussions and those deal discussions are progressing very well. And that's the intangible factor that we really monitor.

Yeah. And I would just add, we feel, Bryan, that we're also benefiting globally now in Asia Pacific and in Europe from the activity we implemented as well. We can see it coming through. And then one last item on that is more and more differential partners are actually speaking to us, partners that typically would not -- not in the [SI] (ph) space, not in the existing space that are trying to understand how they can utilize the UiPath platform in their business. So we feel really strong about all the activity.

Okay. Appreciate that. And then just as it relates to pricing dynamics, can you just talk about what you're seeing in market pricing over the last several quarters really as it relates to competitive deals as well as what you're seeing on average across renewals?

Yeah. We see it relatively stable. There's nothing -- people see the value and the ROIs that we provide. You can see that in many of the case studies and the stories and even in some of the demos, Brian, and I think that ROI has given us a good moat around pricing. And so really price is not as much of a factor as deals for us, especially with competition. People will try to undercut it, but they can't deliver the ROI that our platform delivers. And that's really why we've been able to maintain a pretty steady pricing and discounting set of metrics here, regardless of the economic conditions and competitive environment.

Very good. Thank you.

Thank you. And our next question comes from Keith Weiss with Morgan Stanley. Please state your question.

Thank you guys for taking the question. A little bit on sort of the competitive environment around Generative AI. All of us are going around and listening to a lot of companies talk to us about trying to infuse Generative AIs to their portfolios and it seems like a big benefit they expect to accrue is automation and a lot more automation within their solutions. Does that muddy the waters for you guys at all? And is there anything you have to do in your messaging to sort of help customers understand what they're going to get from a UiPath versus application vendors saying, “Hey, Generative AI is going to help take care of all these road casts and do all these automations for you?” Like how do you make sure that you ensure that clarity in the marketplace?

Well, first of all, I would like to make clear that we believe Generative AI doesn't change the competitive dynamic when it comes to automation platform. In the end, most of the use cases for Generative AI are in the creator space. So you use Generative AI to create artifacts that are deployed on the platform. I think that plays into our advantage. I think there is no secret for everyone that we have the best automation platform, most complete the enterprise-grade platform that offer governance and security to our customers. Generative AI helps us to even increase the adoption because it can appeal to a broader audience, less technical people can create better automation. But our platform runs both automation much more reliable, much more secure than any other platform. So clearly, to me, that's an advantage. And I want to also point out that there is no company that has an exclusivity to a particular GenAI technology. We are using, for instance, Open AI, Google Vertex, Amazon Lambda, everything that is in the market. So I think that long term -- mid- to long term, the creator GenAI will be basically commoditized. And the essence would be that the best platform is going to win even with better chances in the market because the adoption will be also democratized.

I'll tell you, Keith, this is from my side. I think it's given us an incredible amount of tailwind to articulate, first, our AI story at UiPath and give us a platform to showcase where we are with AI and how far we've come. And I think that's really surprised a lot of customers in space. In the last -- since we announced the summit year, I think it was March, we announced the Summit AI in New York City, we had 16 events in Asia Pacific, and they were standing room only. And I can tell you from those discussions, and I've spoken to a number of C-level executives that actually attended in person. And the comment back was, we are so surprised at how far you are. We're super excited about the opportunity that automation can bring and how far you can take it. So from a go-to-market perspective, from our team's perspective, I think it's been an incredible opportunity to showcase UiPath, the platform and the decisions we made in September of last year to bring it out. And I think people will be very excited at Forward VI to see how far we've come as well.

Excellent. Thank you, guys.

Our next question comes from Matt Hedberg with RBC Capital Markets. Please state your question.

Great. Thanks for taking my questions guys. Congrats as well. Maybe just continuing the GenAI kind of questioning. Yeah, a lot of good content today. And I'm curious, Rob, how do you expect to articulate success monetarily? Do you think in a couple of quarters or a year, you're going to be able to specifically call out the actual tailwind or benefit to growth from GenAI?

I think we will be able to say -- look, I think our strategy that we'll continue to execute again. We'll continue to drive that. We'll continue to look at how we benefit from GenAI. And I believe we are already showcasing how it's impacting our results as part of our strategy. And I think that will continue as we continue to drive NorthStar and the value creation that customers are receiving as we get more and more reference customers you think we'll scale as we speak more in the boardroom and we bring the ASIs to the floor, all of those will be in our favor. And honestly, when you look at communication, mining, document understanding of what we're doing in that space, these are game changers for customers and the value they receive. And that's what's going to showcase and that's what we'll showcase in terms of the return that we will get in the next quarters and the next years.

Got it. Thank you. Maybe just a quick one for Ashim. Realizing that NRR is more of a trailing metric. It did tick down a little bit here sequentially. Do you think we're closer to a bottom in that number as we sort of think towards the second half of this year?

Yeah. I mean the way that I look at this is I feel really good about the progress that we've made on the go-to-market changes that we've articulated earlier this year and last year. And I think as those continue to pay dividends, our expansion rate is the area that you're going to see benefit, you'll see benefit come through in that area. So we still are navigating a variable environment, but the changes that we made, we just -- we're two quarters from having done it, one quarter from stabilization. So I really look forward to seeing the benefits of that come through our metrics here as we continue to execute.

Got it. Appreciate the color. Thanks, guys.

Thanks, Matt.

Our next question comes from Brad Sills with Bank of America. Please state your question.

Great. Thank you so much. I wanted to ask about the verticals. It sounds like you're seeing some strength here in banking, manufacturing, tech. Any color as to where you're seeing that strength? Are there certain solutions that customers are expanding with more use cases? Is it new business that you're seeing strong in those verticals? And then any commentary on perhaps a vertical with this new pivot towards solution selling that we might start to see on that list in the coming quarters?

Yes, Brad. Great question. We definitely see the full platform around process mining, document understanding and communication driving a lot of that as an integrated platform as customers want to expand automation from pure RPA into broader categories where we're able to use NorthStar. You see that in financial services, banking, in particular, both in Europe and in North America, insurance for sure, across payers and providers. in that space. Remember, we've also implemented go-to-market, which has got industry skills, part of it and our industry solutions team is pretty strong. So we're seeing it in those industries. I would also -- and we forgot to mention public sector, some really strength in public sector that's driving that as well in the federal government. So we're seeing in multiple areas. And I mentioned oil and gas as well, including other areas of energy opportunities as well.

Wonderful. Thanks. And one more, if I may, just on [plan versus expand] (ph). I guess where are you in that balance? Could we start to see more Atlanta? You mentioned some top of funnel softness here but just maybe in the big enterprise or even medium enterprise, could we see some progress with more land accounts going forward?

Yeah, we're working -- I mean, we see -- obviously, we see -- we like we are on the $1 million ARR and above in the $100,000 ARR and above, and we continue to work on the distribution model in this space, and we'll continue to treat some of those models that we've had previously in that space. Ashim?

Yeah. I feel like the quality of what we have is much better. When we're looking at the customers and the logos that we're acquiring, so our enterprise presence or enterprise connections, I think we've seen meaningful progress there. We talk about kind of smaller mid-market, emerging enterprise, we say that in various episodes. I think that that particular segment is going to be more impacted by the variability of the macroeconomic conditions. So I think, Brad, the area for us is not a quantity play necessarily that's going to churn up and down. It's quality and then where we want to get even better and better is then advancing those quality customers up through better and better sales specialists to increase our expansion. That's kind of how we are measuring it and how we look to it.

Great to hear. Thank you so much.

Our next question comes from Terry Tillman with Truist Securities. Please state your question.

Hi, everyone. This is Joe Meares on for Terry. Thanks for taking the questions. You mentioned the SAP relationship briefly in your prepared remarks. I'm just curious how they're helping you on the go-to-market side? And is there any way that you can quantify early benefits from the partnership?

Yeah. multiple aspects. One is working with ASIs. They -- we also have joint teams working on joint accounts. We've created a common architecture to present to our customers. We're busy going through the enablement of both organizations. And that will continue to expand through the year. So we've had multiple significant discussions between both companies, and we feel really positive around the enablement. And right now, it's all about enablement and positioning with customers and working with the ASIs to incorporate the automation in how they go to market as well. And we will see the benefits of that SAP partnership in '25 for sure -- in FY '25.

Great. And then just as a follow-up, is there any way that you can quantify the impact of the 10 solution accelerators you have out there that they're having on the implementation cycles or ROI for customers? Thanks again.

We don't disclose metrics around individual solutions or product lines at this time. What I can tell you is we continue to monitor the applicability in the sales cycle and customer uptake, and we're really pleased with the feedback, but we don't provide quantitative metrics or disclose them.

Thank you.

Our next question comes from Fred Havemeyer with Macquarie. Please state your question.

Hey, thank you. I have a single set of questions, but two parts here. One for Ashim, one for Daniel. I'm thinking, Dan, since we last spoke, I've had a lot of fun working with training up various different AI models of a convolutional one working on a workstation right now. And I think what struck me through some of this experience is how many of these models are getting more and more efficient, especially being deployed in the Generative AI space sufficiently being deployed on smaller and smaller sets of hardware. So I'm curious kind of two parts here. Firstly, perhaps for Daniel, is there an opportunity in the future perhaps for more of the Generative AI workloads? We shifted towards the Edge rather than using, say, like centralized APIs from some of the hyperscalers out there? And then secondly, for Ashim, while we're in this phase right now of having Generative AI primarily hosted and available through hyperscalers, is there any impact on the gross margin line at all to some of the products that are being offered as they're run through these APIs? Thank you.

I think that's a very interesting question and perspective about what the future of GenAI. We are experiencing quite a bit with Llama II at this point. And eventually, I think for some of the use cases, like the one in [Migma] (ph), we would love to be capable of deploying this on the edge because we'll significantly reduce the cost, the bandwidth required, time to value, and it's kind of premature at this point to really understand if we can run a significantly large model like, I don't know, 13 billion parameters on the Edge. But certainly, it's an interesting way to look forward.

And then Fred, like, when I look at it, our gross margin is 88%. We talked about 85% and long-term model of greater than 80%. These are numbers that we've done there. I think right now with what we see in front of us, we factored the uptick of both the cloud and AI capabilities in there, and we're in the early days of pricing on these areas, and those are going to be factors for us to consider in terms of workloads and where they are. So we look at this as developing tremendous value. And so it's not really a threat to our margins from that perspective right now, and we feel very good about the way we've modeled that going forward.

Thank you. And then if I could ask one more, I guess, a third question here because Rob, I don't want to fret about you at all. I don't want to leave you unquestioned. I'd love to ask as you're having conversations with executives that are considering adoption of broader suites of AI solutions, just how are you with UiPath considering and addressing privacy concerns, data governance concerns the like, especially with respect to Generative AI?

Probably a question for Daniel. But I would tell you that generally, our security folks will take, our CISA will take -- and CISA security team will take them through how we deal with data security, data privacy, had lands in multi-tenants where the testing takes place and explain to them how we go through it in in a way that we would normally go through any kind of sales. But so far, we're handling it, I would say, not with the ease, but in very detailed discussions, and we have detailed road maps around that as well.

And actually, automation offer a very good way to anonymize request to even a public gene service. For instance, if you want to -- if you want to understand better document, we can use our on-prem services to OCR to digitize the document and then apply [PI] (ph) algorithm and then send an anonymized document to GenAI and answer questions about it and then translate it back to the user. I think there are different approaches to privacy and security. And we are really well positioned to leverage our platform to offer this enterprise-grade use of GenAI.

Thank you all very much.

Thank you.

[Operator Instructions] Our next question comes from Kirk Materne with Evercore ISI. Please state your question.

Hi. This is Chirag Ved on for Kirk. Congratulations on the strong quarter, and thanks for taking the question. Maybe just one for me. As you look into the deal trends through August and September, are you seeing more of a continuation of the same deal scrutiny that's been prevalent through the year or conversations starting to get more constructive and do customers seem more willing to invest. Are there any changes in general that you'd flag? Thank you.

No. Like from our standpoint, one, we don't really -- I don't want to give in-quarter updates, Kirk, which I know everybody can respect. I think we've we feel -- just the environment, I think Rob commented on it. I think we look at the environment relatively stable, is variable. And depending on the industry, I think conversations move up or down. That being said, Rob talked about it earlier. I think customer conversations are very constructive. They have been. And just having been a customer, I can tell you where there's an ROI, it's -- the conversations are constructive. And I think that's something that we've demonstrated across our customer base for a while now.

Thank you. Our next question comes from Ari Terjanian with Cleveland Research Company. Please state your question.

Hey, Ari, you are on mute.

Please unmute yourself. We can't hear you.

Why don't we go to the next one, please?

Our next question comes from Michael Turits with KeyBanc. Please state your question.

Hi, guys. This is Billy on for Michael. Thanks for taking the question. Can you just talk a bit about the trends you're seeing in selling to IT and IT users versus maybe the line of business and business users, especially within the context of the opportunity for Generative AI to democratize that adoption of automation?

Yeah. What I would tell you is when we launched the platform, we always said we needed to get into C level, and we needed to be more relevant with the IT, the CIO. And that would also bring in ASIs. And we feel like that we're now able to actually bring the two together, showcase why they need the platform, how the platform helps them consolidate software, allows them to focus on areas in discovery and automation, infused with AI. And then we're able to take that using NorthStar into the boardroom and articulate the value that the CFO or the CEO or the head of HR can actually get from automation. So that's more and more the conversations we're having, all the NorthStar discussions we talk about is exactly that. I feel like the CIOs are really starting to understand the platform, the benefits they get and the value that they can get from it. And that's why they actually want to use more of the platform when they understand how you can connect document understanding, to communication mining, using test suite to drive that and bolt into automation. We see that as something that's differentiating us versus the competition in a significant way, and the value equation is just -- that's really driving the issue into the boardroom as well. Super positive about it.

Thank you. Our next question comes from Scott Berg with Needham & Company. Please state your question.

Hi, everyone. Congrats on the nice quarter. I guess one question I have is, one of the items that came up in our work in the quarter was all the kind of explosion and interest in GenAI was kind of an accelerator. It certainly enhanced customer interest in some of the automation solutions that are out there, specifically RPA. But at the same time, it almost made some deals a little bit maybe more complex and helped shift some deals around. Wanted to see how you thought about the balance of kind of that interest in making deals more complex versus maybe in generating larger deals versus maybe slowing some deals down in the quarter and thoughts on second half opportunities within that. Thank you.

Yeah. I mean what I would tell you is that our customers that we've been working with, the deals we spoke about around NorthStar, our customers have been focused on value and the value creation that we can create from them. Once they've gone through that and they see what's the opportunity, they want to understand the technical environment, what the product does, how it goes. And that's kind of secondary to many of them. There's a view that we are one of the best engineering organizations in automation that we actually know where we're going with GenAI, we know AI at an incredibly detailed level, and that's why we feel like the whole movement that's happened has given us an ability in a stage to actually showcase our differentiation in this market. In other words, customers also are stunned. They don't want to see announcements. They want to actually see real benefits that they can showcase and how it can showcase through automation. So we feel really good about that.

Thank you. Our next question comes from Michael Turrin with Wells Fargo Securities. Please state your question.

Hey, Michael.

Hey, great. Thanks. Appreciate taking the question. The net retention rate metric looks to be stabilized in the 120s. You have a good cadence of AI-related product announcements that we're all adjusting. The Q4 guide for ARR looks more muted than what we generally expect from a seasonally stronger period from the business. And so maybe, Ashim, you can just help frame how you're incorporating some of the go-to-market changes, just some of the macro commentary and any visibility you have into just deal progression between now and end of the year and how it all stacks up into the rest of your guidance if that -- if there's any way to compare that at all to prior [indiscernible].

I would actually just say the word, thanks, I would just say the word is consistency. We've been pretty consistent about guiding what's in front of us, but also thinking about the factoring in the variability of the environment and the go-to-market transition. We're pleased with the progress of it. We feel good about our guidance.

Thank you. And there are no further questions at this time. I'll hand the floor back to management for closing remarks.

Yeah. I'd just like to thank everybody for joining us for the questions. And I would look forward to seeing you all at Forward VI. I appreciate your time. Thank you. Have a good evening.

Thank you. This concludes today's call. All parties may disconnect. Have a good day.